Here's Why Some Used Cars From Ford And GM Are Now More Expensive Than New Models

Sticker prices of some used cars from General Motors Co GM, Ford Motor Co F, and other legacy rivals in the U.S. are now higher than the list price of their new models, data from app-based car insurance comparison firm Jerry showed.

What Happened: Historic low inventory for new cars due to supply chain issues, chip shortages, and the Russia-Ukraine conflict has resulted in long wait times, driving more people to the used car market despite record-high prices.

Sticker prices of used 2021 models of Ford’s Mustang and Bronco are higher by $2,157 to $9,425 than the new ones, data from Jerry shows. The Ranger and Explorer 2021 used editions are $,6,935 and $1,536 higher.

GM’s full-size pickup Sierra’s and full-size sports utility vehicle Chevrolet Tahoe’s used 2021 models are $4,174 and $7,322 more expensive than their new models.

Ford and GM did not respond to Benzinga's request for comment outside normal business hours.

“The pandemic has turned the car market on its head,” Henry Hoenig, a data journalist at Jerry, told Benzinga.

He added that dealers have fewer new vehicles and longer wait times for delivery due to chip shortages and production halts despite strong demand.

“Now, we’re in a unique situation where certain lightly used 2021 models of top-selling U.S. cars cost more than the sticker price on their new counterparts.”  

GM, Ford, Toyota Motor Corp TM, Honda Motor Co HMC, and others have paused production many times in the recent past due to the chip crunch and other supply chain snags. The move has led to lower inventory but higher profits for dealers as buyers are ready to pay more.

Used car prices for four of the top 10 best-selling vehicles in America are now higher than their new models, data from Jerry showed. The data compares prices for 2021 models with fewer than 20,000 miles to the manufacturer’s suggested retail price (MSRP) for new 2022 models.

“Consumers with the luxury of time can wait for the car they want and potentially get the best deal in addition to the color, trims, and options desired. For consumers who can’t wait, options are much more limited,” said Tyson Jominy, vice president of data and analytics at J.D. Power, an automotive research consultancy.  

“In a normal market, a new car dealer sells about 0.9 used cars for every new car it retails. However, that mix has now gone up to 1.25 or higher depending on geography and brand.”

See Also: US Car Buyers Are Traveling Longer Distances To Find Their Vehicle As Dealer Inventories Dry Up: J.D. Power

Historically Low Inventory: According to J.D. Power Retail Inventory Tracker, the U.S. reported a historic low new car inventory of 826,424 vehicles in February. 

In Feb. 2019, the inventory was at 3.4 million units and in Feb. 2020, just a month before the COVID-19 pandemic hit, it was at 2.74 million units. A year later, the inventory had slumped to 2.17 million units.

Price Action: The Dow Jones U.S. Automobiles Index closed 0.6% lower at $1,198.7 a share on Friday.

Photo courtesy: Ford